Corporate Health Insur., Inc. v. Texas Department of Insurance, 220 F.3d 641 (5^th Cir. 2000)-In the wake of Texas' recent litigation concerning HMO liability for treatment decisions, this court denied Texas' petition for a rehearing en banc.  Texas sought reconsideration of this court's holding that ERISA preempted the Independent Review Organization (IRO) provisions of the Texas Insurance Code.  See Corporate Health Insur., Tnc. v.  Texas Department of Insurance, 215 F. 3d 526 (5^th Cir. 2000). See detailed analysis.

Texas' petition rested in part on the recent decision in Pegram v. Herdrich, 120 S. Ct. 2143 (2000), which held that mixed eligibility and treatment decisions of an HMO acting through its physicians were not fiduciary acts.  Therefore the plaintiff did not state a claim under ERISA for breach of fiduciary duty based on such decisions. See detailed analysis. However, this court declined to read Pegram to mean that "every conceivable state law claim survives preemption so long as it is based on a mixed question of eligibility and treatment."

To the extent that the Independent Review process creates an alternative mechanism for seeking benefits, ERISA preempts it. Although Texas can use its police power to "regulate the minimal quality level of medical care," the "law is clear that Texas cannot provide a supplementary claims process by binding the HMO to pay for a treatment that is simply a second opinion [by the IRO] on medical necessity about which reasonable doctors might reach differing conclusions."